ACC 290 FINAL EXAM. Questions & Answers (100%)
Question 1
The best definition of assets is the
a. resources belonging to a company that have future
... [Show More] benefit to the company.
b. collections of resources belonging to the company and the claims on these resources.
c. cash owned by the company.
d. owners’ investment in the business.
Question 2
Which of the following is not a liability?
a. Accounts Receivable
b. Accounts Payable
c. Interest Payable
d. Unearned Service Revenue
Question 3
Which of the following financial statements is divided into major categories of operating, investing, and financing activities?
a. The income statement.
b. The balance sheet.
c. The statement of cash flows.
d. The retained earnings statement.
Question 4
Ending retained earnings for a period is equal to beginning
a. Retained earnings – Net income + Dividends.
b. Retained earnings – Net income – Dividends.
c. Retained earnings + Net income – Dividends.
d. Retained earnings + Net income + Dividends.
Question 5
Which of the following is not an advantage of the corporate form of business organization?
a. Easy to raise funds
b. Favorable tax treatment
c. No personal liability
d. Easy to transfer ownership
Question 6
An advantage of the corporate form of business is that
a. it has limited life.
b. its ownership is easily transferable via the sale of shares of stock.
c. it is simple to establish.
d. its owner’s personal resources are at stake.
Question 7
A small neighborhood barber shop that is operated by its owner would likely be organized as a
a. partnership.
b. corporation.
c. proprietorship.
d. joint venture.
Question 8
If services are rendered for cash, then
a. assets will increase.
b. stockholders’ equity will decrease.
c. liabilities will decrease.
d. liabilities will increase.
Question 9
A revenue generally
a. increases assets and decreases stockholders’ equity.
b. increases assets and liabilities.
c. increases assets and stockholders’ equity.
d. leaves total assets unchanged.
Question 10
A revenue account
a. is increased by debits.
b. is increased by credits.
c. is decreased by credits.
d. has a normal balance of a debit.
Question 11
Which accounts normally have debit balances?
a. Assets, expenses, and revenues
b. Assets, liabilities, and dividends
c. Assets, expenses, and dividends
d. Assets, expense, and retained earnings
Question 12
In recording an accounting transaction in a double-entry system
a. the amount of the debits must equal the amount of the credits.
b. there must only be two accounts affected by any transaction.
c. the number of debit accounts must equal the number of credit accounts.
d. there must always be entries made on both sides of the accounting equation.
Question 13
The usual sequence of steps in the transaction recording process is
a. journalize, analyze, post to the ledger.
b. analyze, journalize, post to the ledger.
c. journalize, post to the ledger, analyze.
d. post to the ledger, journalize, analyze.
Question 14
Under the expense recognition principle expenses are recognized when
a. they are paid.
b. they are billed by the supplier.
c. the invoice is received.
d. they contribute to the production of revenue.
Question 15
The revenue recognition principle dictates that revenue should be recognized in the accounting records:
a. when cash is received.
b. when the performance obligation is satisfied.
c. at the end of the month.
d. in the period that income taxes are paid.
Question 16
Merchandising companies that sell to retailers are known as
a. wholesalers.
b. service firms.
c. brokers.
d. corporations.
Question 17
Gross profit equals the difference between
a. sales revenue and operating expenses.
b. net income and operating expenses.
c. sales revenue and cost of goods sold plus operating expenses.
d. sales revenue and cost of goods sold.
Question 18
Net income will result if gross profit exceeds
a. purchases.
b. cost of goods sold plus operating expenses.
c. operating expenses.
d. cost of goods sold.
Question 19
Under the perpetual system, cash freight costs incurred by the buyer for the transporting of goods is recorded in which account?
a. Freight-Out
b. Freight Expense
c. Freight-In
d. Inventory
Question 20
Financial information is presented below:
Operating expenses $ 32000
Sales revenue 205000
Cost of goods sold 165000
The profit margin ratio would be
a. 0.04.
b. 0.20.
c. 0.96.
d. 0.80.
Question 21
Financial information is presented below:
Operating expenses $ 20000
Sales returns and allowances 9000
Sales discounts 4000
Sales revenue 190000
Cost of goods sold 91000
The gross profit rate would be
a. 0.54.
b. 0.45.
c. 0.49.
d. 0.53.
Question 22
Financial information is presented below:
Operating expenses $ 49000
Sales returns and allowances 5000
Sales discounts 6000
Sales revenue 206000
Cost of goods sold 108000
Gross Profit would be
a. $93000.
b. $87000.
c. $103000.
d. $98000.
Question 23
The LIFO inventory method assumes that the cost of the latest units purchased are
a. the first to be allocated to ending inventory.
b. the last to be allocated to cost of goods sold.
c. the first to be allocated to cost of goods sold.
d. not allocated to cost of goods sold or ending inventory.
Question 24
Which of the following statements is correct with respect to inventories?
a. Under FIFO, the ending inventory is based on the latest units purchased.
b. FIFO seldom coincides with the actual physical flow of inventory.
c. The FIFO method assumes that the costs of the earliest goods acquired are the last to be sold.
d. It is generally good business management to sell the most recently acquired goods first.
Question 25
All of the following are examples of internal control procedures except
a. customer satisfaction surveys.
b. insistence that employees take vacations.
c. using prenumbered documents.
d. reconciling the bank statement.
Question 26
Each of the following is a feature of internal control except
a. separation of duties.
b. an extensive marketing plan.
c. recording of all transactions.
d. bonding of employees.
Question 27
For which of the following errors should the appropriate amount be subtracted from the balance per books on a bank reconciliation?
a. Deposit of $900 recorded by the bank as $90.
b. Check written for $63, but recorded by the company as $36.
c. A returned $200 check recorded by the bank as $20.
d. Check written for $59, but recorded by the company as $95.
Question 28
A check written by the company for $116 is incorrectly recorded by a company as $161. On the bank reconciliation, the $45 error should be
a. added to the balance per books.
b. deducted from the balance per books.
c. added to the balance per bank.
d. deducted from the balance per bank.
Question 29
The following information was available for Pharoah Company at December 31, 2017: beginning inventory $70000; ending inventory $102000; cost of goods sold $624000; and sales $816000. Pharoah inventory turnover ratio (rounded) in 2017 was
a. 7.3 times.
b. 6.1 times.
c. 9.5 times.
d. 8.9 times.
Question 30
The following information was available for Tamarisk, Inc. at December 31, 2017: beginning inventory $86000; ending inventory $132000; cost of goods sold $652000; and sales $864000. Tamarisk days in inventory (rounded) in 2017 was
a. 74.5 days.
b. 60.8 days.
c. 46.2 days.
d. 48.0 days. [Show Less]